How to Calculate ROI?
Return on Investment (ROI) is a popular profitability ratio used to evaluate the efficiency of an investment. The formula for ROI is simple:
ROI = [(Current Value - Cost of Investment) / Cost of Investment] × 100
Understanding the Results
A positive ROI means the investment has earned a profit, while a negative ROI indicates a loss. When comparing different investments over different timeframes, it's best to look at the Annualized ROI, which standardizes the return over a one-year period.
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